Seoul City Gas Consumer Rates Reduced by 12.6% ... Heating Rates Down 10.7%

Natural Gas Raw Material Cost Decline ... City Gas Company Supply Cost Increased by 0.074 KRW per MJ

[Asia Economy Reporter Jo In-kyung] Due to the decline in crude oil prices leading to a decrease in natural gas raw material costs, city gas consumer rates in the Seoul area will be reduced by 12.6%.

The Seoul Metropolitan Government announced that from the 1st, the supply cost of city gas companies will be increased by 0.074 KRW per unit of sales heat quantity (MJ·megajoule). This is the first price increase in three years since 2017.

Considering the difficult household economy caused by the novel coronavirus infection (COVID-19), the city explained that it has suppressed the factors for gas rate increases as much as possible, resulting in a 1.64% decrease in the total cost of five city gas companies?Seoul City Gas, Coway Energy Service, YESCO, Daeryun ENS, and Kiturami Energy?compared to the previous year.

However, due to the rise in temperatures in the first half of the year and the economic recession caused by COVID-19, city gas sales volume decreased by 4.4% compared to the previous year, leading to the 0.074 KRW increase in the unit supply cost.

City gas rates are finally determined by adding the wholesale rates of Korea Gas Corporation to the retail supply costs of regional city gas operators.

Although the supply costs of city gas companies increased, the large reduction in natural gas raw material costs adjusted the city gas consumer rates to 13.2953 KRW per megajoule, down by 1.9232 KRW (12.6%).

Additionally, as a result of rate adjustments by usage, the city gas rate for residential heating was reduced by 10.7%. Assuming an annual usage of 28,000 megajoules per household, the rate is expected to decrease by approximately 47,890 KRW.

Meanwhile, the Seoul Metropolitan Government increased the labor costs of customer center workers responsible for meter reading and other public services under city gas companies by 5.97% compared to the previous year. Based on ordinary wages, the hourly wage is 10,754 KRW, which is higher than the Seoul living wage hourly rate of 10,523 KRW.

The city expects that improving the treatment of meter readers and inspectors will also enhance the level of public services.